How Do Merchant Bankers Grow Ideas Into Public Companies?

David Senra says a merchant bank's special situations department grows a promising idea from birth to a moderate success as a private company, then to a big success as a public company.

In the past the work was done exclusively with money. Now it is done with money and advice, and the advice is often more valuable than the money. The bankers became marriage brokers, arranging what they call economic cross-fertilization. They will do anything that involves money when they think they have an edge through trust, reputation, discretion, or contacts. His notes keep circling the same ground: money, advice, trust, and relationships. They also incubate companies.

They do not want control. They take minority interests and leave management to the managers. They try anything that generates the making of money, and in the process they sometimes lose money.